NAKURU 1 ACRE FOR SALE OPPOSITE STATE HOUSE.
This 1 acre land for sale is located in a prime area of Nakuru town directly opposite Nakuru State House.
Here is a link the the google map https://maps.google.com/maps/ms?msid=205617053586273466800.0004dd1fc97f0b9bb2d1f&msa=0&ll=-0.285043,36.083114&spn=0.005407,0.010203
This land can be developed to a number of commercial usages such as hotel, shopping mall or offices.
Return on Investment as Hotel.
If developed into a hotel, the returns will be as below.
| Cost Item |
Kshs |
% |
| Land |
57,000,000.00 |
14.7429299 |
| Preliminary |
1,800,000.00 |
0.46556621 |
| Construction |
249,600,000.00 |
64.5585139 |
| External Works |
12,480,000.00 |
3.2279257 |
| Contingency |
4,992,000.00 |
1.29117028 |
| Professional fees |
12,480,000.00 |
3.2279257 |
| Project Management fees |
2,496,000.00 |
0.64558514 |
| Marketing |
850,000.00 |
0.21985071 |
| Financial Charges |
44,928,000.00 |
11.6205325 |
| Total |
386,626,000.00 |
100 |
| Financing Plan |
Kshs |
% |
| Developer |
137,026,000.00 |
35.4414861 |
| Debt Finance |
249,600,000.00 |
64.5585139 |
| Presales |
0.00 |
0 |
| Total |
386,626,000.00 |
100 |
| PROFIT | ||
| TOTAL INCOME PER YEAR |
130,560,000.00 |
|
| TOTAL EXPENDITURE |
386,626,000.00 |
|
| RETURN ON INVESTMENT IN YEARS |
2.96 |
|
Assuming a modest accommodation charge of kes 2,000 per room per night, Only 20 days per month occupancy rate and the profits accrued from the sale of beverages and food to offset the running costs such as salaries, maintenance, cleaning etc, the hotel project will pay back in 3years.
Also, we have assumed construction cost per m2 to kes 40,000 .This ensures the highest possible quality of construction to take place without any compromise to workmanship and quality of materials.
A charge of kes 2,000 per night in Nakuru is still quite modest and low considering most hotels situated in such prime areas charge kes 3,500 and above per night. This ensures that the highest chance will be the rates increasing to the usual kes 3,000 to 4,000 or 100% occupancy as opposed to the assumed 20 out of 30 days occupancy rate.
With the numerous tourist attractions in Nakuru such as Lake Nakuru, Menengai crator, Lake Naivasha,Elementaita etc, this will surely attract a huge amount of visitors willing to spend at the hotel.
Use of the space as an office block.
Assuming kes 50 per square foot rent, the rental income for the 1600m2 per floor x 5 floors will be kes 48m per year.
The construction cost reduces to kes 35,000 per m2 since offices take less construction costs than hotels.
The return on investment is 7.3 years as tabulated below.
| Cost Item |
Kshs |
% |
| Land |
57,000,000.00 |
16.143193 |
| Preliminary |
1,800,000.00 |
0.50978504 |
| Construction |
224,000,000.00 |
63.4399162 |
| External Works |
11,200,000.00 |
3.17199581 |
| Contingency |
4,480,000.00 |
1.26879832 |
| Professional fees |
11,200,000.00 |
3.17199581 |
| Project Management fees |
2,240,000.00 |
0.63439916 |
| Marketing |
850,000.00 |
0.24073182 |
| Financial Charges |
40,320,000.00 |
11.4191849 |
| Total |
353,090,000.00 |
100 |
| Financing Plan |
Kshs |
% |
| Developer |
129,090,000.00 |
36.5600838 |
| Debt Finance |
224,000,000.00 |
63.4399162 |
| Presales |
0.00 |
0 |
| Total |
353,090,000.00 |
100 |
| PROFIT |
48,000,000.00 |
|
| TOTAL INCOME PER YEAR |
48,000,000.00 |
|
| TOTAL EXPENDITURE |
353,090,000.00 |
|
| RETURN ON INVESTMENT IN YEARS |
7.36 |
|
Conclusion.
Hotel investment for this plot is better than office block investment with a return on investment of 3 years compared to 7 years.
Francis Gichuhi Kamau, Architect.
info@a4architect.com
0721410684.
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